A customer shops at a Victorian supermarket operated by Russian food retailer Dixy Group in Moscow, Russia, October 20, 2016. REUTERS/Maxim Zmeyev
Moscow: July, 18, 2014 (SDN/QJ) – Russian shoppers are switching to cheaper food due to a decline in real disposable income, according to the leading food company. of X5 Group (FIVEDR.MM) on Monday, as High Inflation Cripples Purchasing Power.
Although a strong ruble and a slowdown in consumer demand helped Russia rein in inflation, which rose to a 20-year high on an annual basis after Moscow sent tens of thousands of forces in Ukraine on February 24, consumer prices are still high.
Federal Statistics Service Rosstat reported last week that consumer prices have risen by 11.60% so far this year. But food inflation in the second quarter of 2022 ran at 19.5% year-on-year, said X5, up from 13.5% in the first quarter.
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Decreasing factors, including the strengthening of the ruble and increased supply of fruits, vegetables, eggs and sugar, will however reduce the rate of growth, retailers said. Read also : This Underestimated Real Estate Exchange is a Screaming Purchase Right Now.
In a business update, X5 said that the net sales of “hard discount” Chizhik jumped 28 times year-on-year in the second quarter to 6.8 billion rubles ($120.4 million). Total net sales increased 18.6% year-over-year in the quarter to 647.3 billion rubles and it opened 300 new stores.
“X5 continues to focus on strengthening its position in key regions of operations and expanding its presence and market share organically as well as through selected M&A opportunities,” the company said.
X5 could benefit from an exodus of foreign companies opposed to Russia’s actions in Ukraine. At the end of June, X5 renamed almost all the stores of the Prisma retail chain and agreed to buy it from the Finnish company SOK Retail for an undisclosed amount in mid-June.
High inflation has been the main concern of Russian families for many years as it has reduced the standard of living, something this year will be exacerbated by the economic crisis caused by the unprecedented Western sanctions against Russia.
The Bank of Russia is widely expected to cut the key rate to 9.5% at its July 22 board meeting after Russia cut consumer prices in June.
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Reported by Reuters; Editing by Emelia Sithole-Matarise
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